Mandatory Annual Report Descriptions of Business Model and Strategy, Investor Uncertainty, and Disclosure Cascade Effects

81 Pages Posted: 14 Aug 2018 Last revised: 7 Feb 2022

See all articles by Vasiliki E. Athanasakou

Vasiliki E. Athanasakou

Saint Mary's University, Canada - Sobey School of Business

Martin Walker

University of Manchester - Manchester Business School

Steven Young

Lancaster University - Department of Accounting and Finance

Paulo Alves

Universidade Católica Portuguesa, Católica Porto Business School; Lancaster University Management School - ICRA

Mahmoud El-Haj

Lancaster University - School of Computing and Communications; Lancaster University

Paul Rayson

Lancaster University

Date Written: February 6, 2022

Abstract

Policymakers view commentary on business model and strategy (BMS) as a central pillar of effective corporate reporting. We examine the impact of mandatory annual report BMS disclosure on two aspects of firms’ information environment: investor uncertainty and provision of (voluntary) BMS-related content in timelier communication channels. We use for identification the UK Corporate Governance Code 2010 de facto BMS reporting mandate for a subset of London Stock Exchange firms. We confirm that BMS disclosure increased in response to the mandate. In response, we predict and find a material treatment period decline in investor uncertainty, together with increases in investor presentations and BMS-related disclosure in earnings press releases. A structural model reveals that earnings releases and investor presentations mediate the link from annual report BMS disclosures to lower investor uncertainty.

Keywords: Strategy, Annual Report Narratives, Textual Analysis, Information Asymmetry

JEL Classification: M41, M21, D89

Suggested Citation

Athanasakou, Vasiliki E. and Walker, Martin and Young, Steven and Alves, Paulo and El-Haj, Mahmoud and Rayson, Paul, Mandatory Annual Report Descriptions of Business Model and Strategy, Investor Uncertainty, and Disclosure Cascade Effects (February 6, 2022). Available at SSRN: https://ssrn.com/abstract=3212854 or http://dx.doi.org/10.2139/ssrn.3212854

Vasiliki E. Athanasakou

Saint Mary's University, Canada - Sobey School of Business ( email )

Sobey Building 311
923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

Martin Walker

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Steven Young (Contact Author)

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Lancaster LA1 4YX
United Kingdom
+441 5245-94242 (Phone)
+441 5248-47321 (Fax)

Paulo Alves

Universidade Católica Portuguesa, Católica Porto Business School ( email )

R. de Diogo Botelho, 1327
Porto, Porto 4169-005
Portugal

HOME PAGE: http://www.catolicabs.porto.ucp.pt/en/who-is/paulo-alves/1639

Lancaster University Management School - ICRA ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Mahmoud El-Haj

Lancaster University - School of Computing and Communications ( email )

InfoLab21
Bailrigg
Lancaster, LA1 4WA
United Kingdom
+44 1524-510348 (Phone)

HOME PAGE: http://www.lancaster.ac.uk/staff/elhaj/

Lancaster University ( email )

InfoLab21, South Drive
Lancaster University
Lancaster, LA1 4WA
United Kingdom
1524510348 (Phone)

HOME PAGE: http://www.lancaster.ac.uk/staff/elhaj

Paul Rayson

Lancaster University ( email )

School of Computing and Communications
Lancaster LA1 4YX
United Kingdom

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